A person’s “social network” says a lot about them, and since Facebook collects a whole lot of information about its users, it’s only logical that this information can be used in some more official capacity, rather than just advertising. Cue the application of a patent that Facebook was granted this week, which might lead to loan-seekers receiving a loan approval or rejection based on their social network.
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The technology has been owned by Facebook ever since it bought Friendster in 2010, and the patent describes a system that could authorize and authenticate users based on their social connections on Facebook.
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The first applications mentioned in the patent are things like “spam filtering, or help with search queries”, but it could apply to the approval or rejection of “a loan based on a user’s social connections”. Specifically, the patent application stipulates:
When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes. If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.
Although it really sounds scary, we can’t predict when or even if Facebook will ever use this patent and whether loan approvals could ever be filtered through the network’s data, to determine a person’s network of friends. There are already companies though that already use alternative data to establish credit risk – it wouldn’t be too strange to assume that social media will play a similar role in the near future.